Belarusian President Aleksandr Lukashenko claims Russia’s potash giant and former partner Uralkali is bankrupt, but still offers reconciliation between the two companies and the extradition of jailed chief.

Lukashenko, nicknamed Europe's 'last dictator', and known for his
political stunts, announced Uralkali was bankrupt. The president
said he had ordered the relevant agencies to inform about the
fact the London and Moscow exchanges where Uralkali shares are
traded.

Uralkali dropped 2.71 percent down to 177.41 rubles on Moscow
floors, and is down 0.25 percent at £28.030 on the London
Exchange, and its capitalization is valued at roughly $17
billion.

According to Lukshenko, Uralkali is $12 billion in debt and only
has a $2 million surplus, adding the financial figures Uralkali
is reporting are ‘bogus’, which is an ‘international crime’.

On Wednesday Belarusian First Deputy Prime Minister Vladimir
Semashko said Belarus was ready to restore
cooperation with Uralkali under any ownership.

"The restoration of our partnership alone will raise potash
prices by 50-100 percent in 2013 and early 2014," Lukashenko
said.

The statements come amidst the now notorious ‘potash war’ between Russia and Belarus, that
broke out after Russia’s industry giant Uralkali exited
from its consortium with Belaruskali, that controlled
about 40 percent of the world’s exports.

Shortly after the break –up Vladislav Baumgertner, Uralkali CEO,
was arrested and detained in Minsk, with the
company’s key shareholder Suleiman Kerimov put on the Belarus
wanted list. Both Russian businessmen were accused of “abuse
of power and office".

A drama unfolded around the future of Kerimov's stake, with
investors trying to oust the wanted shareholder out of the
company. Last week, a lawyer connected to the deal Alexander
Dobrovinsky confirmed the purchase of Kerimov's stake on
his Facebook page, sending the company’s stock up 7 percent.
Several billionaires have been rumored to be buying his stock,
but there has been no official sale.

However, the damage inflicted by the sudden disruption of the
commodity price may not be an easy fix. The break-up of the
cartel caused prices to fall nearly 30 percent, and likely to hit
$300 per ton.

“Even assuming the cartel will be back, it won’t help the
market to recover quickly,” VTB Capital’s Elena Sakhnova told
Bloomberg on September 16.

Сivilized divorce, prison break

"As of today, two variants are possible. The first is a
civilized divorce. We are ready for this, if you decided to leave
- leave, but do not prevent the work being done here,”
Lukashenko said.

Unlike Semashko , Belarusian president said cooperation between
the two potash producers could only continue if Uralkali assumes
new ownership.

“The second variant is to continue our joint work. Owners will
change, people, who are interested in producing potash
fertilizers at the Uralkali company, will come - we are ready to
work with them," the president added.

“The Belarusian Potash Company is dead no matter who buys
Kerimov’s stake,” Robert Chapman, founder of Chapman Capital
told Bloomberg.

The president of Belarus said a reunion with Uralkali and
extradition of CEO Vladislav Baumgartner were not out of the
question, as long as Russian investigators promised to follow up
on his charges in accordance with the law, RIA Novosti reported.

Potash was previously Belarus’s most profitable venture,
accounting for 20 percent of government revenue. In 2012,
Belaruskali revenues were $2.14 billion, according to Belarusian
Ministry of Finance data.

"The damage inflicted on Belarus must be repaid in full.
Everything that was stolen from us must be returned, to the last
kopeck," Lukashenko said.

According to Lukashenko, Belaruskali is valued between $33 and
$36 billion.